The Companies Act,2013

Lok sabha passed the companies bill, 2012 on December 18, 2012 and on August 08, 2013 Rajya sabha also gave its consent. Finally, without delay the President of India put his signature and hence we have a new companies Act, 2013. The new Act gives predominant importance to the interests of investors. When we go through the newly introduced clauses, it is clear that many provisions are intended against the unscrupulous people who became Directors of the Companies. Moreover, more involvement is allowed to professionals such as Company Secretaries and Chartered Accountants. The ultimate power vests with Central Government to make rules and procedures. People expecting fair use of this power by the Government. In total, through the Companies Act, 2013, the corporate world is brought under the iron structure of professional and regulatory bodies, and the government. If professionals and government act in the interest of the country, we can eliminate the multi crore scams.

The following clauses in the new Companies Act, 2013 are relevant for the directors of companies.

Clause-165

The maximum number of Companies in which a person can be appointed as Director is limited to twenty. Maximum number of Public Companies in which a person can be appointed as Director shall not exceed ten.

Clause-167

If a Director absents himself from all the Board Meetings during a period of twelve months with or without leave of absence, he has to vacate the office. (not specified as calendar year or financial year)

Contravention to this clause will attract a punishment to the concerned Director with an imprisonment for a term of one year or with fine of rupees five lakhs (maximum) or with both.

Provision to clause 168

The Director shall forward a copy of his resignation along with detailed reasons of resignation to the Registrar of Companies within 30 days of resignation.

Clause-173

Board has to meet four times every year, but not more than 120 days shall elapse between two meetings.

Seven days notice in writing is to be given to all Directors for convening a Board Meeting.

Circular Resolution will not be passed unless, it has been approved by a majority of Directors or members who are entitled to vote on the Resolution.

Clause-203

Every Company belonging to such class/classes of Companies as may be prescribed shall have the following Whole Time Key Managerial Personal(KMP). 1.   Managing Director/CEO/Manager/Whole Time Director 2.   Company Secretary 3.   Chief Financial Officer

·         Appointment of every KMP shall be made by means of a Board Resolution containing the terms and conditions of the appointment including remuneration. ·         If the office of KMP is vacated, shall be filled by the Board within a period of six months. Contravention to this clause attracts penalty as follows:

The Company Shall punishable with fine Rupees 5 lakh (to the maximum)

Every Director/KMP who is in default shall be punishable with a fine of rupees 50,000/- and where it continues, rupees 1000/- fro every day.